Limited liability companies (LLCs) are a popular and relatively inexpensive choice for establishing a professional, legal business structure for a new company. LLCs offer many benefits for businesses including liability protection for the company’s members (owners) so that their personal assets are not subject to claims against the business.
Anyone planning to establish an LLC will need to prepare and file articles of organization with the state where the LLC will be registered to conduct business.
Articles of organization are designed to give the Secretary of State or Company Registrar for the state the information they need to determine whether or not to approve a new company, authorizing that company to conduct business.
State laws governing businesses are designed to protect consumers and state residents, so every state has laws and requirements businesses must comply with.
Businesses can register to conduct business in any state; however, most businesses choose to organize their limited liability companies in the state where their principal office is located.
Sometimes it may make sense to choose a different state for an LLC because of that state’s privacy laws or tax treatment; some states impose franchise taxes and sales and use taxes, so it may be cheaper to organize under a neighboring state’s laws.
When choosing to establish an LLC in a state other than the organizer’s home state, organizers are encouraged to investigate whether the home state requires additional paperwork or filings for the business.
Specific requirements vary from state to state; however, in general, most states require the following information:
Articles of organization may also be designed to include any other information the organizers wish to include, such as which LLC members or officers are authorized to handle banking and other financial transactions. Some states also require names and contact information for each member (owner) and manager.
Articles of organization are specific to limited liability companies. However, they are similar in many respects to the documents used to establish for-profit or not-for-profit corporations: articles of incorporation. In some states, articles of organization may also be referred to as a certificate of organization. It is important to choose the right type of legal document based on the type of business structure chosen.
Before preparing and filing articles of organization for a new LLC, it is important to make sure the desired name for the new company is available and meets state-specific requirements. A proposed new LLC whose name is too similar to another business already registered with that state will likely be required to choose a different name.
Most states also have naming conventions for LLCs, and may require that one of the following be included in the company’s official name:
In most states, searching existing business names is a fairly simple process that can be conducted online through the state’s Secretary of State or Business Registrar’s website.
Filing articles of organization with most states will require an initial filing fee. This varies from state to state and can vary widely from under $50 to more than $500.
If getting the new limited liability company up and running quickly is a priority, most states also offer the option to expedite filings for an additional cost.
After verifying that the desired name of the new business is available and gathering the required information, it is easy to prepare and print articles of organization using LegalNature’s document creation tool online, 24 hours a day, seven days a week.
Simply answer a series of questions and follow their step-by-step guidance to create a professional legal document designed to comply with state-specific requirements.
Be careful not to mistake filing articles of organization with approval to begin conducting business. In most states, the Secretary of State’s office will need to review the filing and officially approve the new LLC before the company can legally begin business operations.
When the state has issued its seal or other indication of approval, the LLC will be authorized to begin offering its products or services.
Submitting articles of organization to create a new LLC does not automatically mean the state will approve the new business. The following reasons are why states may reject articles of organization:
Some states also have laws restricting the use of the limited liability company structure for certain types of businesses. For example, California law states that professional service organizations such as accountants, massage therapists, and chiropractors (among others) may not form LLCs, and must choose a different business entity structure instead.
Depending on the nature and size of the business, and its industry, additional requirements may need to be met.
LLCs with more than one member (owner) may also want to consider creating operating agreements and/or member control agreements. These types of documents provide a framework for, and establish, how the company will be governed.
Where articles of organization serve to establish and document high-level information about a new LLC, member control agreements and LLC operating agreements document the members’ agreement about how, and how long, the board of governors (similar to a board of directors) will serve, how many managers and officers the company will have, and how voting rights and capital rights are allocated among the members.
These documents are also important because they allow LLC members to document under what circumstances a membership right may be transferred and how one member’s share and interests should be handled in the event of a death, disability, or other unforeseen event.
In most states, filing articles of organization is simply the first step in notifying the state of the intention to conduct business as a limited liability company.
Most states require registered LLCs to file annual or other periodic notices with the Secretary of State’s office confirming that the LLC is still conducting business, and that the information previously filed with the state has not changed. Every state is different; some states charge a nominal fee for these periodic filings while other states simply require that a form is filed regularly.
After the original articles of organization have been filed, it is important to remember that there are certain events that could necessitate an amendment to them.
Some examples of reasons to amend existing LLC articles of organization include:
When filing a required amendment to previously-filed articles of organization, businesses should be mindful of state-specific requirements which may include time restrictions and the format for amendments. Filing fees may also be required.
If a business files articles of organization as a limited liability company or professional limited liability company but later decides to change business structure to a corporation, partnership, or sole proprietorship, it may be necessary to file documents with the Secretary of State to terminate the LLC or PLLC and establish the business again using the new choice of entity.
Organizers could choose to create their own articles of organization to establish a new limited liability company; however, if state-specific statutory requirements are not met, there could be frustrating delays and expenses before the company can start offering its products or services.
Creating articles of organization for a new limited liability company using LegalNature’s online resources is easy, cost effective, and fast. In most cases, organizers can complete and print these documents in around 15 minutes!
To learn more about articles of organization and all of the legal documents LegalNature offers for businesses and individuals, visit the article center today. Then, get started in minutes online, or call LegalNature at 888.881.1139.
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